System and methods for facilitating informed trading of financial instruments

ABSTRACT

The invention relates to an improved means for interactive computerized communications having a facilitated capability for order entry and order execution, and providing an enhanced range of trading forms and methods to clients of brokerage firms dealing in financial instruments. In particular, the invention relates to a type of interactive computerized system and software program providing services based from trading patterns, to result in a more efficient and flexible range in the type of allowable trades, and that provides thereby innovative and strategic advantages to individual investors of brokerage firms, for actively managing financial instruments held in trading accounts.

CROSS-REFERENCE TO RELATED APPLICATIONS

This application is a continuation application of U.S. patentapplication Ser. No. 11/542,098 filed Oct. 3, 2006, which claims thebenefit of U.S. Provisional Patent Application Ser. No. 60/723,829 filedOct. 5, 2005.

FIELD OF THE INVENTION

The present invention is related to the field of prioritized managementof financial instruments. More specifically, the present inventionrelates to an improved mode of online communication relating toautomatic trade orders by which an investor is able to obtain addedmarket information so that the investor can make more fully informedinvestment decisions and trade in line with those decisions. The addedmarket information includes that which reveals relationships between aparticular financial instrument, a target security, chosen by theinvestor and other securities such as the relationship of what one ormore securities were purchased in the past generally contemporaneouslywith the target security.

BACKGROUND

The advent of an interactive, computerized means of communicationaccessible to the public via the internet has made possible a widevariety of innovative business models and practices. In recent years,entire new sectors of the domestic and international economies haveappeared, involving new modes of market commerce, in particular. As aresult, many entrepreneurs have begun to envision a “virtual”marketplace, having capability for conducting a vast spectrum ofordinary business transactions with greatly improved efficiency andflexibility.

Securities web sites are popular internet services that allow users tomanage investment information. Financial institutions, includingbrokerages, which make up and/or provide access to various financialinstruments, have implemented on-line services that allow investors toengage in trading over data communication networks, including theInternet. For purposes of this invention, financial instrument aresecurities, stocks, bonds, currencies, options, futures, commodities andderivatives thereof. As used herein, the terms trade and/or tradinggenerally refers to transactions such as buying and/or selling. Anyinvestor having access to the Internet may more directly engage intrading activity without having to speak to a broker to enter theirorders in the marketplace for execution. Having to speak to a broker inorder to place a trade can prevent the investor from making that tradein a timely fashion and thereby change the nature and degree of the riskinvolved in the trade. For investors who believe they have sufficientinformation in order to appreciate the risk involved in the trade, anyadded steps that delay the placement of the trade are undesiredinefficiencies.

In addition to the many advantages that may be realized in standardaccounting procedures, brokerage firms dealing in financial instrumentshave sought to expand their capabilities for improved interactivecomputerized communication with their individual retail accountinvestors. Previously, prior to the appearance of the internet, tradingorders from such retail investor clients could be communicated only inperson or via telephone, whether using voice or fax transmission.Processing such trade orders typically would require a certain amount oflag time before execution, minimally from perhaps a few minutes to asmuch as several hours or more. More recently, with online communicationcapabilities becoming widely available, there has now opened apossibility for individual investors of financial brokerage firms tohave such orders entered and executed more rapidly, often requiring lessthan one minute of lag time between the investor entering the order andhaving receipt of an online trade confirmation in reply, communicatedelectronically within a very few moments.

In addition, and in further contradistinction to the fairly limitedrange of standard and traditional types of trading modalities that werepreviously available to their retail clients, brokerage firms have begunto devise expanded modes of interactive communication where such orderscan be made more flexible, so as to provide a greater range of possibletrading formulations, allowing individuals to manage their tradingaccounts with their brokerage to define more innovative types of tradingorders, such as to include certain conditional or contingentprerequisites that may be advantageous, in a manner that has not beentechnically feasible.

As an example, retail brokerage firms have traditionally allowedindividual investors to specify certain trading orders with buy or selllimits, prescribing that a trade not be executed unless a certain pricelevel for the transaction might become available in the market exchangewithin a certain limited time frame, usually designated as within onetrading day. In a similar manner, such investor trading orders mightordinarily be further conditioned as buy stop, or sell stop orders.Whereas a buy limit order requires that a purchase not be affected abovea certain price, a buy stop order requires buying only at a maximalprice level. In the case of sell orders, whereas a sell limit orderrequires that a sale of financial instrument not be affected below acertain price, a sell stop order requires that the sell order be enteredonly after accession of a certain price.

Most brokerage firms would also allow investor orders to request orderswhere the two conditional contingencies, the limit criterion and thestop-price criterion, are combined. An individual investor might therebyinstruct the brokerage firm to either buy or sell at a specified priceor better after the market price has advanced or declined beyond a givenstop price.

Brokerage firms establishing an interactive or online computerizedtrading capability as part of their financial services offered to thepublic might additionally allow their retail investors to specifyanother type of conditional trading order, involving the designation ofa buy or sell stop price level that can be made variable, in accordancewith the fluctuations of the market. Such initially non-activated orconditional orders, usually designated as “trailing stop” orders, aredefined as buy or sell orders imposing two additional contingencies,involving the market price at the time when the order was entered, and aspecified trailing range, or price differential between the currentmarket price and the trigger or activation price. Market pricefluctuation beyond such range then causes such orders to becomeimmediately activated, as market orders to buy or sell.

For practical reasons, and because individual traders would usuallyrequest a trailing stop order only as part of a protective or defensivestrategy, such trailing stops typically would not be combined with anyadditional criteria involving buy or sell stops, but rather becomedesignated as orders to be executed at the current market price,whenever the trading market price goes beyond, either above or below,the price differential specified by the range of the trailing stop.Thus, the trigger or activation price level for a trailing sell stop canmove higher as the market price increases, but it cannot be moved lowerfrom the point of the highest ongoing market price less the trailingdifferential. Similarly, a designated trigger price for a trailing buystop can only move lower as the market price decreases, but cannot beadjusted to move any higher than the ongoing current market price minusplus the trailing differential.

As a matter of standardizing procedures, a brokerage firm may imposeadditional restrictions whereby such contingent orders might be heldstatic so as not to become activated for execution at the current marketprice for some briefly limited period of time subsequent to activationof the trigger point, perhaps a period of one minute or less. Anotherrestriction imposed by brokerage firms might require that suchcontingent orders only be specified or entered by investors at certainpredetermined incremental price levels, defined usually either in dollaramounts or fractions thereof, or as a price range limited within anincremental or fractional percentage of the current market price, forany given traded issue or security.

Brokerage firms establishing an interactive or online computerizedtrading capability as part of their financial services offered to thepublic might additionally offer their retail investors recommendations,or suggestion services. Two types of recommendation services areconducted through what is known as content-based filtering andcollaborative filtering.

Content-based filtering services attempt to identify items similar toitems that are of interest to the user by assessing the item content.Typically, content-based filtering services do not provide a mechanismfor evaluating the quality or popularity of an item. Collaborativefiltering services attempt to identify items to users based on theinterests of a community of users. Typically, collaborative filteringservices are based on profiles of individual users—similar profiles areused to generate recommendations.

As the extended capabilities of online communication becomes morecommonly available, more elaborate trading strategies and moreinnovative forms of interactive trading becomes possible.

As more elaborate trading strategies and more innovative forms ofinteractive trading becomes possible, investors have greater and greaterneed to identify the risk involved in the potential purchase of anysecurity and, after purchasing the security, efficiently manage the riskinherent in any financial portfolio. The present invention satisfies thedemand.

SUMMARY

The invention relates to an improved means for interactive computerizedcommunications having a facilitated capability for order entry and orderexecution, and providing an enhanced range of trading forms and methodsto clients of brokerage firms dealing in financial instruments.Financial instruments are securities, stocks, bonds, currencies,options, futures, commodities and derivatives thereof. The presentinvention is described in reference to a security, although anyfinancial instrument can be subject to the present invention. The use ofthe term security is for discussion purposes and is in no way intendedto limit the present invention.

In particular, the invention relates to a type of interactivecomputerized system and methods including an improved mode of onlinecommunication in which a retail investor can gain access to historicaltrading data that allows the investor to determine the relationship thata certain security of interest to the investor (termed “target security”for purposes of this application) has with other securities. One suchrelationship is what other security or securities were purchasedgenerally contemporaneously with the purchase of the target security.Generally contemporaneously is defined by a duration of time. In oneembodiment, generally contemporaneously means one security or securitieswere purchased within one day (24 hours) of the purchase of the targetsecurity. In other embodiments, the duration of time can be less thanone day (24 hours) or greater than one day (24 hours) between the tradesof a security or securities and the target security. The investor candesignate the duration of time. Alternatively, the Company, third partybrokers, or exchanges or any other third party can designate the timebetween when a security is purchased and when the target security ispurchased.

With such information, the investor may gain knowledge of how the targetsecurity is generally viewed in the marketplace and what otheropportunities may exist for purchase. Through this information, theinvestor may gain added confidence in the merits of the investor'sdecision to purchase or not purchase a certain security and overallbecome a more fully informed investor. The investor may feel more securein the investor's decision to rely or not to rely on the opinion of abroker or advisor regarding the investor's interest in a targetsecurity.

It is an object of the present invention to facilitate the transactionalcapabilities of such interactive trading services, by providing retailbrokerage investors with an increased range and variety of selectabletrading strategies.

It is another object of the invention to provide information to a retailbrokerage investor so that the investor can make a more fully informedpurchasing decision about a target security. The information includeshistorical data by which the investor can identify the relationship thatthe target security may have with one or more additional security. Forexample, the investor may be able to determine that when a targetsecurity is purchased, what one or more additional security is purchasedgenerally contemporaneously with same. This relationship information istermed for purposes of this application also “trading patternsinformation”. The trading patterns information may be a grouping of thesecurities purchasing decisions made by the same investor that hasinterest in a certain security. By accessing this grouping, the investorcan determine what other security or securities the investor purchasedgenerally contemporaneously with the past purchase of the targetsecurity through online generally automatic communications and therebywithout the need to compile this information from more standard sources(such as records maintained for other purposes or even hard copies inthe investor's files) that document all the security purchases made bythe investor in the past. The trading patterns information may also be agrouping of the securities purchasing decisions made by all of investorsin the same brokerage firm employing the system and methods of thepresent invention. Such large grouping of data would be without thatspecific information by which the identity of the other investors can begleaned and therefore the privacy interests of the company's privateinvestors would be protected. Additional embodiments of the presentinvention include trading data obtained outside the company throughaccess provided through consensual arrangements with third party sourcessuch as other brokerage firms.

The present invention will be further appreciated, and its attributesand advantages further understood, with reference to the detaileddescription below of some presently contemplated embodiments, taken inconjunction with the accompanying drawings, in which:

DRAWINGS

FIG. 1 is one embodiment of the system according to the presentinvention shown as trading pattern information flowchart;

FIG. 2 is an embodiment of an order screen for online order executionaccording to the present invention;

FIG. 3 is another embodiment of an order screen for online orderexecution and that displays trading patterns information according tothe present invention;

FIG. 4 is a graphical rendition of trading pattern information accordingto the present invention;

FIG. 5 is an embodiment of a watch screen for online monitoring of aparticular stock or option according to the present invention;

FIG. 6 is an embodiment of an alert screen for online monitoring of aparticular stock or option according to the present invention;

FIG. 7 is an embodiment of a confirmation that an order was placedaccording to the present invention;

FIG. 8 is another embodiment of the system according to the presentinvention in which data concerning the investor's past trades may beaccessed;

FIG. 9 is another embodiment of the system according to the presentinvention in which data concerning the past trades of a plurality ofinvestors may be accessed;

FIG. 10 is another embodiment of the system according to the presentinvention in which data concerning the past trades outside of aparticular company may be accessed;

FIG. 11 is another embodiment of the system according to the presentinvention in which data concerning the past trades of the investor usingthe system and other investors at a company may be accessed;

FIG. 12 is another embodiment of the system according to the presentinvention in which data concerning the past trades of the investor usingthe system and other investors outside the company may be accessed; and

FIG. 13 is another embodiment of the system according to the presentinvention in which data in which the investor using the system mayaccess data regularly in the past trades of those within and outside thecompany may be accessed.

DETAILED DESCRIPTION

The present invention pertains to order entry and execution of financialinstruments. For purposes of this application, a financial instrumentare any type of securities, stocks, bonds, currencies, options, futures,commodities and derivatives thereof that can be traded. Although thepresent invention is described in reference to a security, any financialinstrument is contemplated. Orders typically define the security symbol,action, quantity, price and duration. The security symbol is the tickersymbol used to designate the security in the market. Markets include,but are not limited to, the Chicago Mercantile Exchange (CME), ChicagoBoard Options Exchange (CBOE), International Securities Exchange (ISE),Boston Options Exchange (BOX), Philadelphia Stock Exchange (PHLX), NewYork Mercantile Exchange (NYMEX), Archipelago Exchange (ArcaEx). The NewYork Stock Exchange (NYSE), American Stock Exchange (AMEX), PacificExchange (PCX) and National Association of Securities Dealers AutomatedQuotations (NASDAQ). A market order is an investor order that is to beexecuted as quickly as possible at the prevailing market price. Aninvestor for purposes of this application may be a private individual, abusiness, or a legal entity, for example, a trust.

Bid is the price point where a buyer is willing to purchase a givenstock or option contract. This is the price individual investorstypically receive when they sell stock or options at the market. Forexample, if the bid-ask spread for an option is 4¼-5, an investorlooking to sell at-the-market will receive the current bid of 4¼. Ask orask price is the price point where a seller would be willing to sell agiven stock or option contract. Also known as the offer, this is theprice individual investors pay when they place a market order. Forexample, if the bid-ask spread for an option is 3-3¼, the individualinvestor can expect to pay the ask price of 3¼to buy the contract.Conversely, the same person looking to sell the contract will get thebid price of $3. The ¼ point spread is earned by the market maker.

Trading actions are the events that occur to the defined security andare selected by the investor. Trading actions include: buy, sell, buy toopen, buy to close, sell to open, and sell to close. Actions aregenerally used in futures/options investing to distinguish betweenestablishing versus closing a position. Buy is to exchange, trade orpurchase for money or its equivalent. Sell is to exchange or deliver formoney or its equivalent. “Buy to close” is an order entered to close ashort position. Consequently, a “sell to open” order is always used toopen a short position. A “sell to open” order is entered to establish anew short position. Consequently, a “buy to close” order is always usedto close a short position. “Buy to open” is an order entered toestablish a new long position. Consequently, a “sell to close” order isalways used to close a long position. “Sell to close” is an orderentered to close a long position. Consequently, a “buy to open” order isalways used to open a long position.

Quantity is the amount of a security to be traded, for example shares.An “all or none” (AON) feature associated with quantity allows a traderto buy or sell a specified number of contracts at a single price. Thenumber of contracts must meet or exceed a predetermined threshold level,and these orders must be executed during pit trading sessions. All ornone orders are routed to the primary exchange where they are manuallyheld and executed when eligible. Furthermore, these orders are notreflected in the bid/ask quotes. Generally, AON is not recommended onorders of less than 20 contracts since order execution may be affected.

Price includes the type of order. A market order is executed as quicklyas possible at the prevailing market price. A limit order allows aninvestor to buy or sell a predetermined number of shares at a specifiedprice (or better than specified price, if available). Limit ordersguarantee a price (or better price than specified), but do not guaranteean execution. A stop order is a contingency order to buy or sell a stockwhen the market reaches a particular level. When the price reaches thatlevel specified in the stop order, the stop order becomes a market orderand is executed at the best possible price. A stop-limit order is like astop order. This order will be triggered by a move up or down to aparticular price level. Once that level is reached, the order becomes alimit order, which must be executed at a specific price. In contrast, aregular stop order will be executed at the market price rather than at aspecified price. A “market-not-held-order” is an order issued by aninvestor allowing the floor broker to use his or her best judgmentregarding the price and timing of the trade. A “market on close” is anorder executed or triggered just prior to the close of the market.Finally, a “buffered limit” is the desired limit price that will beapplied as an offset to the triggered quote, at the time the order issent to the exchange.

Duration is the length of time the order remains open for fulfillment. Aday order is an order to execute a trade that will automatically becancelled at the end of the trading day if it has not been filled. A“good-until-cancelled (GTC) is an order to execute a trade that remainsopen until the trade is completed or the investor cancels the order.Unlike a day order, which expires at the end of a trading day, a GTCorder will remain in effect until it is filled or cancelled.

The system 21 for use with an embodiment of the present inventionincludes a network enabled device, a network server module and adatabase. The network enabled device, for example computer, includes adevice having components to couple to a network such as the Internet.The network enabled device includes a communication port and processor,and may also include memory and a display.

One preferred embodiment of the present invention is a system 21 thatincludes a series of displays 31, or screens, that may be made availableonline and by which an investor can identify a certain security,otherwise referred to as target security, first place an order—therebysetting the parameters and conditions under which the investor will bewilling to purchase the security—or obtain trading patterns informationfor the target security before placing the order, and if the order isplaced first, then obtain trading patterns information for it leadingpossibly to the placement of an order or orders for one or moreadditional securities gleaned by the investor from the trading patternsinformation. This preferred embodiment can include a screen, or display,having a tool bar and a button which by clicking thereon the tradingpatterns information can be accessed.

FIG. 1 is a flowchart 101 according to the present invention showing theoperation of the system by which an investor can select a certainsecurity, or target security, obtain trading patterns information aboutit from an online database, and, if the investor so chooses, place anorder for the target security or one of the securities identified by theinvestor, for example, from the trading patterns information. Thetrading patterns information concerns past trades, which the investorcan identify by grouping the information within the database foranalysis. Trading patterns information concerning past trades includesdata concerning the trades that the investor accomplished generallycontemporaneously with past trades of the target security as wall asdata concerning trades accomplished by investors different from theinvestor who identified the target security.

The system 21 shown as a trading pattern information flowchart 101 inFIG. 1, allows the investor to select to input a trade order 105 or viewtrading patterns information 107. If a the investor inputs a trade order105, the information is input on an order screen 33 for online orderexecution as shown in FIG. 2. The online order screen 33 initiates theorder of a financial instrument, for example either a security, optionor stock. The order screen 33 includes criteria of: symbol 203, action205, quantity 207, price 209, duration 211, routing 213 and advancedorders 215.

Symbol 203 is the security to be traded. Actions 205 include “buy”,“sell”, “sell short”, “buy to cover” for stocks and “buy to open”, “buyto close”, “sell to open” and “sell to close” for options. Quantity 207is the amount of shares to be traded. Price 209 includes the type oforder (i.e., market, limit, stop, sop limit, market on close) and, ifthe type of order selected requires, the amount in points (i.e.,dollars). The duration 211 can be a day order or good until cancelled bythe investor. Routing 213 is the execution venue in which the order isplaced, i.e., the New York Stock Exchange (NYSE), Chicago MercantileExchange (CME), Chicago Board Options Exchange (CBOE), InternationalSecurities Exchange (ISE), Boston Options Exchange (BOX), PhiladelphiaStock Exchange (PHLX), New York Mercantile Exchange (NYMEX), ArchipelagoExchange (ArcaEx). Advanced orders 215 offer the investor varioustrading strategies. Advanced orders 215 include: “contingent order”,“one triggers other” (OTO), one cancels other” (OCO) and “one triggerstwo” (OT2).

After the investor inputs a trade order 105 on display 33 (FIG. 2), thetrade is entered 119 and the investor can either select to input anothertrade order 105 or view trading patterns information 107 for aparticular security.

The present invention is a system that provides information based ontrading patterns. If the investor selects to view trading patternsinformation 107, trading pattern display 35 (FIG. 3) allows the investorto select from a plurality of securities, a target security to analyze109. An online database is accessed including information concerningpast trades in the securities. As shown in FIG. 1, along with the targetsecurity selected to analyze 109, the investor identifies a grouping ofthe information within the database for analysis, or scope of thetrading patterns information 111. Trading patterns information can beobtained from trading data concerning trades that the investoraccomplished generally contemporaneously with the past trades of thetarget security 113, trading data concerning trades accomplished byinvestors within a particular company 115, but different from theinvestor who identified the target security, and trading data of otherinvestors external to a company's trading service 117. In oneembodiment, generally contemporaneously means one security or securitieswere purchased within one day (24 hours) of the purchase of the targetsecurity. In other embodiments, the duration of time can be less thanone day (24 hours) or greater than one day (24 hours) between the tradesof a security or securities and the target security. The investor candesignate the duration of time between trades while identifying thescope of the trading patterns information. Alternatively, third partybrokers or exchanges or any other third party can designate the timebetween when a security is purchased and when the target security ispurchased. A customer can choose to be excluded from trading patternsinformation. Additionally, trading patterns information theoreticallycould be obtained from third party brokers or exchanges or any otherthird party with order and account pairs within the information passedto a particular company, for example optionsXpress.

To generate a set of trading patterns securities for a given investor,the service retrieves from a database the similar securitiescorresponding to the target security known to be of interest to theinvestor, and then appropriately combines these groupings to generate adisplay of securities as shown in FIG. 3. The grouping of securities isdetermined by the scope of the trading pattern desired. Again, tradingpatterns information includes the investor's trading data, the company'strading data and trading data outside the company. Depending on thetrading pattern selected, the grouping of securities is analyzed todetermine which one or more of the securities were traded generallycontemporaneously with the target security.

FIG. 3 is a display of securities according to the trading patternsinformation selected. The display can be organized according tofrequency of the security traded. It is further contemplated the displaycan be organized by alphabetizing the security. Display 35 is shown uponthe request for a pattern. Trading pattern display 35 includes criteriaof: symbol 301, quote 303, and the data pertaining to the tradingpattern 305.

The system 21 reveals one or more securities—stock, bonds, options,etc.—that were purchased in the past generally contemporaneously withthe purchase of the same target security. When an investor requeststrading patterns information for a given symbol 301, (DIA stock) thetrading patterns system 21 is activated to provide a listing 305 ofother symbols for securities traded by customers who also placed ordersfor the initial DIA stock. Thus, the trade activity of an individualinvestor correlates to a trading pattern (i.e. selling DIA stock) ofother stocks and options.

The listing 305 of other symbols for securities includes criteria of:description 307, market conditions 309 (i.e., last, bid, ask, change,change percent, volume) and action 313. The action criteria 313 allowsthe investor to input and order, i.e., “trade” 315, or select moreoptions 317. Selecting more options 317 opens a box 318 that includesthe criteria of: chain 319, chart 321, watch 323, news 325 and alert327.

The system 21 allows an investor to set an alert 327 for a particularsecurity. The investor can also select an action 313 for a particularsecurity such as trade 315, chain 319, chart 321, or watch 323. Trade315 is the buying and selling of contracts (stock or option). Chain 319is a way of quoting options prices through a list of all of the optionsfor a given security, including the various strike prices, expirationdates, and whether they are calls or puts. Chart 321 allows for agraphical display of the trading history of the stock or option. Watch323 allows the investor to monitor the activity of a particular stock oroption.

If the investor selects the action 313 to watch 323 a particularsecurity, FIG. 5 is an embodiment of a watch display 37, or screen, foronline monitoring of a particular security, for example stock or option.A pull down menu of each watch list 501 is provided. Upon selecting aparticular watch list 501, the investor can add the DIA stock, for whichthe trading pattern was requested.

If the investor selects the action 313 to alert 327 a particularsecurity, FIG. 6 is an embodiment of an alert screen 38 for onlinemonitoring of a particular stock or option. The symbol 601 for the stockof which the trading pattern was requested, DIA, is shown with themarket conditions 605 (i.e., last, bid, ask, volume). The investor canset market conditions 607 (i.e., under last, over last, under bid, overbid, under ask, over ask, under percent change, over percent change) forthe symbol 603.

If the investor selects the action 313 of trade 315, FIG. 7 is anembodiment of a trade confirmation screen 39. This screen 39 confirms tothe investor that the order was placed. This same screen 39 appears whenan investor inputs information on an order screen 33 for online orderexecution as shown in FIG. 2.

FIG. 4 is a graphical rendition of the system providing informationbased on trading patterns information. Once an investor selects to viewtrading pattern information of a target security, the system 21 accessesan online database of information from other investors based upon thesecurity of the order or request. For example, an investor places anorder through the use of a data entry screen shown such as the one shownin FIG. 2 for stock DIA 403. The system 21 accesses the databaseaccording to the target security ordered or requested by the investor.The investor identifies a grouping of the information, i.e., the tradingpatterns of the same investor, other investors, and/or third partyfinancial strategists based on the stock or option to be traded.Investors 405, 407 and 409 are analyzed based upon the securities thatwere traded generally contemporaneously with the stock DIA. Investor 411is not part of the display generated (FIG. 3) because no security wastraded generally contemporaneously with the target security, e.g.,investor 411 never traded the target security. The system 21 can analyzeexecuted and non-executed orders.

The system 21 groups securities through analysis based on current data,historical data or strategist's analyses. The similarity between twosecurities is preferably measured by determining the number of investorsthat have an interest in both securities relative to the number ofinvestors that have an interest in either security. For example,security X and security Y are similar because a relatively large portionof investors that traded one security also traded the other security.

The previous orders—history—of securities and their respective actionsthat an investor has entered and/or executed are assembled by trackingand storing the information. This information is stored not only foreach individual investor, but also for all investors using theparticular trading and securities management system. The information canbe stored from third party financial strategists as well. An algorithmutilizes the data to analyze and display an output to the investor afterthe investor has entered/executed an order.

Turning back to FIG. 1, after the trading patterns information 113, 115,117 of the security is selected, the investor could exit 129 the system21, select more options 127 to place a trade (discussed above), ordirectly enter the trade 119. After the trade is entered 119, theinvestor can yet again select to input a trade order 105 or view tradingpatterns information 107 of a selected security. Once the trade isentered 119, the system 21 stores the input into memory 121. The system21 then monitors the Internet to determine if the trade input is met123. Once the trade input is met, the trade is executed 125. Theinvestor then exits the system 21 or returns to the trading patternscreen 35 (FIG. 3).

In addition to FIG. 1, FIGS. 8-13 are various trading pattern flowchartsaccording to the present invention. The scope of the trading patternscan be analyzed in various strategies. As discussed above with respectto FIG. 1, the scope of the trading patterns information includestrading data of the past trades of the investor currently using thesystem, trading data of past trades of other investors within aparticular company, and trading data of past trades outside theparticular company. FIG. 8 is trading pattern information that analyzesdata concerning the past trades of the investor currently using thesystem. The trading pattern of FIG. 9 analyzes data concerning the pasttrades of a plurality of investors within a particular company. The dataconcerning the past trades outside of a particular company is analyzedin the trading pattern of FIG. 10. FIG. 11 is a trading pattern thatincludes the scope of both the data concerning the past trades of theinvestor using the system and other investors at a particular company.FIG. 12 is a trading pattern that includes the scope of both dataconcerning the past trades of the investor using the system and otherinvestors outside the company. FIG. 13 is a trading pattern thatanalyzes the data of past trades of those within and outside thecompany.

It is further contemplated that a set of trading action inputs (i.e.buy, sell, buy to open, buy to close, sell to open, sell to close) mayalso be generated in the same fashion as the trading patternsinformation. The service retrieves from a database the similar actionscorresponding to the actions given to securities already known to be ofinterest to the investor, and then appropriately combines these lists togenerate a list of possible actions.

Thus, while the invention has been disclosed and described with respectto certain embodiments, those of skill in the art have recognizedmodifications, changes, other applications and the like which willnonetheless fall within the spirit and ambit of the invention, and thefollowing Claims are intended to capture such variations.

1. A system by which an investor can automatically and through onlinecommunications identify possible additional trading opportunitiesrelative to a security identified as a target by the investor, saidsystem comprising: a database comprising data regarding a past actioninput for each security in a group of securities, wherein the pastaction input for each security is one selected from the group consistingof buy, sell, sell short, buy to cover, buy to open, buy to close, sellto open, sell to close, a target security entry display by which theinvestor identifies a target security selected from the group ofsecurities and the investor identifies an action input from a group ofaction inputs for the target security, wherein the group of actioninputs consist of buy, sell, sell short, buy to cover, buy to open, buyto close, sell to open, sell to close; a processor that determines byreview of the database the past action input of one or more securitiesin the group of securities that is the same as the action input of thetarget security within a time period designated by the investor; and adisplay that displays all securities in the group of securities thathave a past action input that is the same as the action input of thetarget security within the time period designated by the investor sothat the investor can identify any additional trading opportunitiesrelative to the target security.
 2. The system by which an investor canautomatically and through online communications identify possibleadditional trading opportunities relative to a security identified as atarget by the investor according to claim 1, wherein the databaseincludes the past action inputs for one or more securities of theinvestor, the past action inputs for one or more securities of aplurality of investors within a trading service company, and the pastaction inputs for one or more securities of a plurality of investorsexternal to the trading service company.